The economy is rebounding and macroeconomic imbalances have stabilized. The global recovery has supported a rebound in exports and continued strong FDI inflows. However, the recovery has been moderately weaker than anticipated and downside risks have increased. Latent banking sector risks are surfacing, following a period of strong credit growth and as banks adjust to updated prudential financial regulations. The humanitarian crisis in northern Rakhine state has created uncertainty over development partner finance and foreign investor sentiment. While direct economic impacts have been largely localized, the social costs and full impacts of the crisis are yet unfolding.
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